Only one-third of earners in the bottom quintile have access to health insurance, retirement benefits or paid sick leave — facts made worse by the risk that a cashier, for example, takes on during a pandemic.
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Prior to the Covid-19 outbreak early last year, the U.S. labor market was at its lowest levels of unemployment since 1969. However, the glowing headlines were not reflective of concerning underlying dynamics.
A Gallup poll survey found that 60% of jobs here in the U.S. are considered “mediocre” or “poor quality” jobs. This burden directly impacts many communities and millions of American workers.
The various protests last year and the 2020 presidential election have placed a spotlight on the need to rebuild a more equal and opportune economy.
The “quality jobs” framework, based on research done by The Good Jobs Institute, looks to address this challenge. QJ strategies believe that companies that invest in improving the lives of employees — providing higher pay and better benefits, and strengthening workplace culture — improve business outcomes. This framework challenges the idea that cutting human capital expenses (i.e., wages) leads to higher profits. In fact, it believes the opposite.
Basically, a quality job means a person’s work is valued and respected and meaningfully contributes to the goals of the organization. It encompasses having a voice in the workplace and the opportunity to shape your work life. It means having accessible opportunities to learn and grow.
Jobs that do not meet employee needs have higher than average turnover, employee dissatisfaction, poorer productivity and a lower-quality consumer experience. So QJ takes the shape of both an investment opportunity and a tool for social good, driving value through a more efficient workforce.
Too many ‘bad jobs’
In 2019, 46.5 million Americans held occupations where the median wage was less than $15 per hour. For someone supporting a family, this level of income would be well below poverty in every single state in the country. And all too often in 2020 during the pandemic, these same underpaid employees (typically in the restaurant, retail and hospitality sectors) were asked to take on risks that higher earners weren’t.
It’s important to note, too, that the type of job does not determine whether it’s a “quality” or “poor quality” job. It’s how the company treats its employees that matters.
Benefits, another good indicator of job quality, have also unfortunately lagged for low-income earners. Gallup’s 2020 report “Characteristics of Good Jobs for Low Income Workers” found that only about one-third of earners in the bottom quintile had access to health insurance and retirement benefits, with an even smaller percentage receiving paid sick leave. Again, the matter’s been made worse by the risk that a cashier, for example, takes on during a pandemic.
Company culture is another area where low earners have suffered. Across the income spectrum, we see agreement: Feelings of purpose in everyday work, support from management and clear growth paths are important to their career satisfaction. However, only 28% of the lowest quintile of earners can claim to have a good job because of these factors.
Inequities brought to bear by the many events of 2020 — and in the data — have made clear an important mandate.
Better jobs, better companies
It’s not just the moral argument that mandates quality jobs, however compelling it may be.
Let me explain. Disengaged employees cost businesses an average of $350 billion every year, or $2,246 per disengaged employee. That’s a steep cost for companies to bear, and it gives reason for businesses to invest in workforce transformation.
Quality jobs strategies may also have the greatest impact on promising companies that suffer from high turnover in addition to poor productivity or disengagement. According to Gallup, companies can spend nearly 34% of an employee’s pay in costs associated with training new employees, low productivity and absenteeism.
So quality jobs both captures currently unrealized value by increasing engagement and lowers costs by limiting turnover.
Today, 55% of the bottom quartile of earners view their current occupation as “just a job,” whereas 63% of all others view their job as “a career.”
This feeling of opportunity is simply not as realized for those receiving the least. A quality jobs company approaches its workforce with an equity mindset where every employee is a valued stakeholder rather than a balance-sheet item or commodity.
And given the long-term earnings benefits, the question is not why investors should be calling on companies to invest in their employees. The question is, why not?
— By Marc Brookman, CEO North America of Schroders